-
IN THE UNITED STATES DISTRICT COURTFOR THE EASTERN DISTRICT OF
PENNSYLVANIA
IN RE UNISYS SAVINGS PLAN : LITIGATION :
:THIS DOCUMENT RELATES TO: :No. 91-3772 :HENRY ZYLLA, ET AL., on
behalf : MASTER FILE NO. 91-3067of himself and all others
:similarly situated :
: v. :
:UNISYS CORP., ET AL. :
MEMORANDUM AND ORDER
HUTTON, J. August 9, 2001
Presently before this Court are Plaintiffs’ Motion for
Partial
Summary Judgment and Memorandum in Support of the Local 444
Plaintiffs’ Motion for Partial Summary Judgment(Docket No.
198),
Defendants’ Cross-Motion for Summary Judgment and Motion in
Opposition to Local 444 Plaintiffs’ Motion for Partial
Summary
Judgment (Docket No. 205), Memorandum in Reply to
Defendant’s
Opposition to Local 444 Plaintiffs’ Motion for Partial
Summary
Judgment and in Opposition to Defendants’ Cross-Motion for
Summary
Judgment (Docket No. 207), Defendants’ Reply Memorandum of Law
in
Support of Defendants’ Cross-Motion for Summary Judgment and
Motion
in Opposition to Local 444 Plaintiffs’ Motion for Partial
Summary
Judgment (Docket No. 210), Defendants’ Motion for Summary
Judgment
Against Local 445, 450, 470, 165 and 3 Plaintiffs (Docket No.
204),
-
1The union Plaintiffs are Locals 444, 445, 450, 470 and 165 of
theInternational Union of Electronic, Electrical, Salaried, Machine
and FurnitureWorkers (“I.U.E.E.S.M.F.W.”), Local 3 of the
International Brotherhood ofElectrical Workers (“I.B.E.W.”).
2The Plaintiffs did not appeal the court’s decision to grant
summaryjudgment on Count II.
-2-
Memorandum in Opposition to Defendants’ Motion for Summary
Judgment
Against Local 445, 450, 470, 3 and 165 Plaintiffs (Docket No.
208)
and Defendants’ Reply (Docket No. 209). For the reasons
stated
below Defendants’ Motions are GRANTED and Plaintiffs’ Motion
is
DENIED.
I. PROCEDURAL BACKGROUND
Almost ten years ago, on November 25, 1991, Plaintiffs filed
a second amended consolidated class action complaint. In Counts
I
and II of the complaint, non-union employees alleged that
Unisys
breached its fiduciary duties and disclosure requirements under
the
Employee Retirement and Income Security Act, 29 U.S.C. §§ 1001,
et.
seq., (“ERISA”), by investing in Guaranteed Investment
Contracts
(“GICs”) issued by Executive Life Insurance Company of
California
(“Executive Life”). In Count III, union employees sought
separate
relief under section 301 of the Labor Management Relations Act,
29
U.S.C. § 185 (“LMRA”) for alleged breaches of collective
bargaining
agreements.1 This Court, on January 26, 1995, granted
summary
judgment in favor of Unisys as to Counts I and II. The Third
Circuit subsequently vacated the dismissal of Count I and
remanded
it for trial.2 See In re Unisys Savings Plan Litig., 74 F.3d
420
(3d Cir. 1996) (“Unisys I”). After a ten-day bench trial,
during
-
3For the District Court’s findings of fact and conclusions of
lawfollowing the bench trial, see In re Unisys Savings Plan Litig.,
No. 91-3067,1997 WL 732473 (E.D. Pa. Nov. 24, 1997).
4 The plaintiffs then sought further review in the United States
SupremeCourt, which denied their writ of certiorari on October 15,
1999. SeeMeinhardt v. Unisys Corp., 528 U.S. 950 (1999).
-3-
which Unisys demonstrated that it committed no wrongdoing,
this
Court entered judgment in favor of Unisys,3 which the Third
Circuit
affirmed on March 22, 1999. See In re Unisys Savings Plan
Litigation, 173 F.3d 145 (3d Cir. 1999) (“Unisys III”).4
Pending the appeals process, this Court stayed further
proceedings on the union Plaintiffs’ claims under the LMRA.
See
Order of Sept. 19, 1996, (Hutton, J.). On July 31, 2000, the
Court
lifted the stay, and the parties subsequently resumed
discovery.
See Stipulation and Order of July 26, 2000 (Hutton , J.).
II. FACTUAL BACKGROUND
Unisys is the product of the 1986 merger between Sperry
Corporation and Burroughs Corporation. Unisys I, 74 F.3d at
425.
Sperry and Burroughs each had maintained retirement plans for
its
employees. Sperry’s plan was known as the Sperry Retirement
Program–Part B (“Sperry Plan”) and Burrough’s plan was the
Burroughs Employees Savings Thrift Plan (“BEST Plan”). Id.
On
April 1, 1988, the Sperry Plan and the BEST Plan were
consolidated
to form the Unisys Savings Plan (“USP”). Id. at 426. Around
the
same time, Unisys established the Unisys Retirement Investment
Plan
(“RIP”) and the Unisys Retirement Investment Plan II (“RIP II”)
for
-
5Local 444 members are former Sperry employees. Unisys
RIP’spredecessor was the Sperry RIP.
6The RIP I mirrored the USP except for Company-matching
contributionsand the definition of service, while the RIP II
mirrored the USP except forCompany-matching contributions. See RIP
I summary plan description, at 6, andRIP II summary plan
description, at 6. The RIP II is not at issue here as itwas offered
to Locals other than the Local Plaintiffs. The RIP I will
bereferred to as the “RIP.”
-4-
its unionized employees.5 Id. at 427. The RIP and RIP II
were
mirror images of the USP, with the exception of the definition
of
service and the amount of the Company match, id. at 426-27, and
all
three plans were administered together.6 See Deposition of
Henry
Zylla of Feb. 17, 1994, at 30, attached as Exhibit 7.
The USP, RIP I and RIP II were “individual account plans” or
“defined contribution plans,” which are given preferential
treatment under the Internal Revenue Code, and also known as
401(k)
plans. Unisys II, 1997 WL 732473, at *2. Such a plan provides
for
benefits based solely upon the amount contributed to the
participant’s account, and any income, expenses, gains and
losses,
which may be allocated to the participant’s account. 29 U.S.C.
§
1002(34). Participants in defined contribution plans choose
where
to direct their contributions. Id. A defined contribution plan
is
completely different from a “defined benefit plan” where
participants are promised, upon retirement, a benefit in the
form
of a fixed percentage of their pre-retirement salary, in
that
participants in defined contribution plans bear the risk of
their
-
7See also Hughes Aircraft Co. v. Jacobson, 525 U.S. 432,
439-41(1999)(discussing the difference between a defined
contribution plan anddefined benefits plan); Bash v. Firstmark
Standard Life Ins. Co., 861 F.2d159, 163 (7th Cir. 1988)(same).
-5-
investments. See id.7
III. STANDARD OF REVIEW
Summary judgment is appropriate “if the pleadings,
depositions, answers to interrogatories, and admissions on
file,
together with the affidavits, if any, show that there is no
genuine
issue as to any material fact and that the moving party is
entitled
to a judgment as a matter of law.” Fed. R. Civ. P. 56(c).
The
party moving for summary judgment has the initial burden of
showing
the basis for its motion. See Celotex Corp. v. Catrett, 477
U.S.
317, 323 (1986). Ultimately, the moving party bears the burden
of
showing that there is an absence of evidence to support the
nonmoving party’s case. See id. at 325. Once the movant
adequately supports its motion pursuant to Rule 56(c), the
burden
shifts to the nonmoving party to go beyond the mere pleadings
and
present evidence through affidavits, depositions, or admissions
on
file to show that there is a genuine issue for trial. See id.
at
324. A genuine issue is one in which the evidence is such that
a
reasonable jury could return a verdict for the nonmoving
party.
See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
A
fact is “material” only if it might affect the outcome of the
suit
under the applicable rule of law. See id.
When deciding a motion for summary judgment, a court must
draw
-
-6-
all reasonable inferences in the light most favorable to the
nonmovant. See Big Apple BMW, Inc. v. BMW of N. Am., Inc.,
974
F.2d 1358, 1363 (3d Cir. 1992). Moreover, a court may not
consider
the credibility or weight of the evidence in deciding a motion
for
summary judgment, even if the quantity of the moving party’s
evidence far outweighs that of its opponent. See id.
Nonetheless,
a party opposing summary judgment must do more than rest upon
mere
allegations, general denials, or vague statements. See Trap
Rock
Indus., Inc. v. Local 825, 982 F.2d 884, 890 (3d Cir. 1992).
The
court’s inquiry at the summary judgment stage is the
threshold
inquiry of determining whether there is need for a trial, that
is
whether the evidence presents a sufficient disagreement to
require
submission to a jury or whether it is so one-sided that one
party
must prevail as a matter of law. See Anderson, 477 U.S. at
250-52.
If there is sufficient evidence to reasonably expect that a
jury
could return a verdict in favor of plaintiff, that is enough
to
thwart imposition of summary judgment. See id. at 248-51.
IV. LOCAL 444 PLAINTIFFS’ CLAIMS AGAINST DEFENDANTS
The interpretation of a collective bargaining agreement is a
legal issue for the court. Int’l Union, United Auto., Aerospace
&
Agric. Implement Workers of Am., U.A.W. v. Skinner Engine Co.,
188
F.3d 130, 138 (3d Cir. 1999). Federal law generally governs
collective bargaining agreement interpretation, however,
traditional rules of contract construction apply when not
-
8Plaintiffs contend that New York law governs this case because
of achoice of law provision in the grievance and arbitration
section of thecontract. There is no doubt that Pennsylvania law
applies to this dispute. The RIP Plan Document effective Apr. 1,
1988 (as amended and restated Apr. 1,1989), however, states that
the RIP “shall be construed, regulated andadministered under and in
accordance with the laws of the State ofPennsylvania, except as
preempted by ERISA.” Id. at 121. It does not appearthat the choice
of law in this case matters as it appears neither New York
norPennsylvania law conflicts with general contract interpretation
principles.
9 The agreement is titled in full “Agreement between
Surveillance andFire Control System Division and the Systems
Management Unit of Shipboard andGround Systems Group, Unisys
Corporation and International Union ofElectronic, Electrical,
Salaried, Machine and Furniture Workers A.F.L.-C.I.Oand Engineers
Union, Local 444 I.U.E.E.S.M.F.W, A.F.L.-C.I.O., as amended
andextended September 10, 1988 - September 6, 1991.
-7-
inconsistent with federal labor law.8 Textile Workers Union
v.
Lincoln Mills, 353 U.S. 448, 456 (1957); Int’l Union, United
Auto.,
Aerospace and Agric. Implement Workers of Am., U.A.W. v.
Mack
Trucks, Inc., 917 F.2d 107, 111 (3d Cir. 1990). When
contract
language is clear and unambiguous, a court must determine
its
meaning as a matter of law. Skinner, 188 F.3d at 138.
A. Do Sections 5 and 7 of the CBA create contractual rightsthat
exist independently of the prospectus and appendix?
Section 7B of the Collective Bargaining Agreement (“CBA”)9
between Defendant and Plaintiffs incorporated by reference
three
documents: the Prospectus and Appendix, the Supplement to
the
Prospectus and a Summary Plan Description (“SPD”).
Plaintiffs
contend that the Amendment and Termination clause of the
Prospectus
conflicts with Section 26F8 of the CBA. In particular,
Plaintiffs
note, that the Amendment and Termination clause of the
Prospectus
provides that “[E]ffective April 1, 1988, the Administrative
Committee may amend, modify, or discontinue the Plan, in whole
or
-
-8-
in part, at any time” but that no amendment could deprive a
participant of “benefits accrued before the amendment without
that
persons consent.” See Prospectus, Unisys RIP, dated April 1,
1988,
at 7. Plaintiffs then assert that Section 26F8 of the CBA
provides
that no interpretation of the CBA could “add to, subtract
from,
delete or modify in any way, the existing provisions of this
Agreement.” See Local 444 CBA, as amended and extended Sept.
10,
1988 - Sept. 6, 1991, at 87. Plaintiffs then seek to
“harmonize”
these provisions.
Plaintiffs assert that the in the “Amendment and
Termination”
clause found in the Prospectus made reference only to the
1988
Prospectus and Appendix and Supplement No. 1. Plaintiffs
contend
the Administrative Committee’s authority granted in this clause
was
limited to amending and modifying terms set forth in these
three
documents. Plaintiffs contend that the terms that are stated
in
the Prospectus and Appendix of April 1, 1988 remain subject
to
amendment by the Administrative Committee, while the terms
that
originate in §§ 5 and 7 of Article 28 of the CBA were
immunized
from amendment by the Administrative Committee by virtue of
the
language of 26F8.
Upon review of the documents referenced by Plaintiffs, the
Court finds no conflict between the provisions. The Amendment
and
Termination clause of the Prospectus and Appendix states that
the
Employee Benefits Executive Committee may modify or amend
the
Unisys Retirement Investment Plan in whole or in part. See
-
-9-
Prospectus, Unisys RIP, dated April 1, 1988, at 7. The clause
also
provides that while no amendment may deprive any member or
beneficiary of benefits or contributions with that person’s
consent, the Plan, however, may be amended to comply with
applicable law, regulation, or the requirements of any
government
authority. See id.
The provision that Plaintiffs contend creates rights beyond
those found in the incorporated document, Section 26F8, on
the
other hand, is located in the CBA within a section covering
arbitration. The language Plaintiffs cite is taken out of
context.
Viewing the clause in the context of the CBA indicates that
the
provision Plaintiffs rely upon relates to an arbitrator’s
authority
in the grievance and arbitration procedure, which is not at
issue
here. The Court thus finds that the CBA did not create rights
in
addition to those found in the incorporated documents.
The Court, additionally finds that, upon reviewing the
incorporated documents, the intent of the parties to the CBA
was
for the RIP to mirror the USP. The express contract language
in
the CBA between Local 444 and Unisys does not afford Local 444
RIP
participants any rights above and beyond those given to
non-union
USP participants. Rather, language in the CBA and
incorporated
plan documents makes clear that the RIP and the USP were meant
to
be identical in all respects except for the definition of
service
and the rate of contribution. The contract clearly and
unambiguously states that the RIP “shall conform with the
Unisys
-
-10-
Savings Plan in all respects, except for the definition of
Service
and the rate of contribution on the part of the Company.” See
CBA,
at 198. Furthermore, any future changes to the “Unisys
Savings
Plan, exclusive of rate of contribution on the part of the
Company
and the definition of service, will automatically apply to
the
Unisys Retirement Investment Plan and all interpretations
and
administrative practices which apply to the Unisys Savings
Plan
shall apply to the Unisys Retirement Investment Plan.” See
id.
The clear intent behind this language was to make the plans
conform to one another except for the definition of service
and
Company-contributions – features which were deliberately carved
out
of the “mirror image” language. Other than these two
carve-out
provisions, the parties intended the RIP and USP to be
administered
identically.
The SPD also made clear that the USP and RIP were meant to
be
“mirror image” plans. The RIP SPD provided the same “mirror
image”
language as in the contract. The SPD is a plan document that
was
incorporated into the CBA. The contract provides that both
Articles 14 (“Safety and Health”) and 28 (“Schedule
D–Medical,
Dental, Life Insurance, Pension and Retirement Investment
Plans”)
include by reference “Plan Documents,” or other documents
which
“legally govern the provision of benefits under the present
and
previous Retirement Investment Plan.” Additionally, the
contract
as a whole includes by reference the applicable “Plan
Documents,”
or “other documents which legally govern the provision of
benefits
-
10Furthermore, the contract provides that any
“improvements,modifications or changes in those plans shall be
automatically applicable tothe employees covered by this
agreement.” See Exhibit 10, at 221.
-11-
outlined in whole or in part in Article 14.”10
The plain contract language demonstrates that Unisys and
Local
444 agreed that the RIP and the USP would be identical subject
to
only two exceptions – the definition of service and the rate
of
contribution. No other basis for treating Local 444 members
differently from participants in the USP exists. The fact
that
participants in the RIP plans were meant to be subject to
the
administrative practices regarding the USP is evident in the
contract provision stating that “future changes to the
[USP],
exclusive of rate of contribution on the part of the Company
and
the definition of service, will automatically apply to the
Unisys
[RIP] and all interpretations and administrative practices
which
apply to the [USP] shall apply to the Unisys [RIP].”
B. Was the Freeze by Unisys prohibited by the CBA?
Having determined that § 26F8 does not conflict with the
incorporated documents and that the intent of the parties was
to
create a mirror image, Plaintiffs’ argument that the CBA
prohibited
the freeze fails. The Amendment and Termination clause of
the
Prospectus, that the Court finds governs changes to the CBA,
provides that “[E]ffective April 1, 1988, the Administrative
Committee may amend, modify, or discontinue the Plan, in whole
or
in part, at any time” but that no amendment could deprive a
-
-12-
participant of “benefits accrued before the amendment without
that
persons consent.” See Prospectus, Unisys RIP, dated April 1,
1988,
at 7.
On April 11, 1991, the California Commissioner of Insurance
seized Executive Life, placing it in conservatorship, and on
April
12, 1999, issued a moratorium on all payments from the
insurer.
As a result, Unisys froze the account balances that included
investments in Executive Life. Unisys acted in accordance with
its
authority as prescribed by language in the CBA and RIP
documents,
and its action constituted an administrative decision by the
benefits committee which applied to all plan participants.
The prospectus permits Unisys to: “amend, modify or
discontinue the Plan in whole or in part at any time. . .”
See
Prospectus, RIP, dated April 1, 1988, at 7. Furthermore,
Unisys
could make certain changes to the RIP, without first having
to
obtain approval from the Administrative Committee if doing so
was
vital to maintaining compliance with applicable law:
[T]he Company. . . reserves the right to amend, modify
ordiscontinue the Plan in whole or in part at any time ortimes. The
Plan may be amended, modified or terminated byaction of the
Administrative Committee within the limitsimposed by the Board of
Directors. The Plan shall be deemedautomatically amended, without
action by the Board ofDirectors or the Administrative Committee, to
the extent theAdministrative Committee deems it necessary or
appropriate tomaintain compliance of the Plan with applicable
statutes andregulations.
See Unisys RIP Plan, at 118. The reservation of the right to
modify, amend or even terminate a benefits plan is a common
feature
-
-13-
in plan administration. Norrily v. Thomas & Betts Corp., 188
F.3d
153, 158 (3d Cir. 1999)(holding that an employer can act
according
to its business interests in amending or terminating a
benefits
plan); Deibler v. United Food and Commercial Workers’ Local
Union
23, 973 F.2d 206, 210 (3d Cir. 1996)(“ERISA generally allows
employers to amend or terminate welfare benefit plans as
will.”);
Hennessy v. Federal Deposit Ins. Corp., 858 F. Supp. 483, 488
(E.D.
Pa. 1994)(stating that an employer may generally terminate
welfare
benefit plans at will).
Local 444 contends that the “amendment and termination”
provisions are at odds with contract language based on Article
26,
Section F(8), a provision in a portion of the contract reciting
the
procedure for grievances and arbitrations. Local 444’s
constant
references to Article 26, Section F(8), however, are
misplaced.
That provision prohibits an arbitrator’s ability, in the
grievance
and arbitration setting, to add to, subtract from, delete or
modify
provisions in a collective bargaining agreement when
interpreting
the agreement. Under the Federal Arbitration Act, a court
may
vacate an arbitration award if arbitrators exceed their powers
or
venture beyond the bounds of their authority. Matteson v.
Ryder
System Inc., 99 F.3d 108, 112 (3d Cir. 1996). It follows
that
arbitrators must base their decisions on the “essence” of
the
agreement, and not modify a provision in an agreement when
interpreting its meaning. Id. Contrary to Local 444's
contention,
this provision has absolutely no bearing on plan
administration
-
-14-
decisions.
C. Did § 7F of Article 28 of the CBA Obligate Defendant toPay
For the Cost fo Transfer From the FIF
Plaintiffs contend that Article 28, Section 7(F) of the CBA,
which states: “Unless specifically stated otherwise, all costs
for
the benefits covered herein will be borne by the Company,”
means
that Unisys guaranteed the investments in Local 444 members’
retirement accounts. According to Plaintiffs, benefits
equals
account values. Because Unisys, through an excerpt of
testimony
from an arbitration hearing, agreed to pay all costs
associated
with providing the “benefits” to participants, Unisys should
have
paid the lost value of the frozen Executive Life account
balances
as a cost of providing the benefits. Local 444 contends that
the
testimony of John Loughlin, the then Vice-President of
Benefits/Financial Administration of Unisys, that “Benefits per
se,
we’re talking about account values, have never been reduced”
means
that the word “benefits” in the contract provision means
account
values. This argument essentially claims that Unisys
guaranteed
the investments in Plaintiff’s account balances.
As discussed, Loughlin’s testimony equating benefits with
account values is completely taken out of context. Loughlin
was
not talking about “benefits” and “account values” in terms of
costs
that will be covered by Unisys. Loughlin was referring to
the
notion that once a participant’s money is placed into an
account,
the money is 100% vested and the company cannot then reduce
the
-
-15-
value for its own benefit. See Prospectus, RIP, dated April
1,
1988, at 7 (“no amendment may cause the Company to recapture
any
contributions previously made to the trust”). Loughlin,
however,
did not mean that accounts could not be reduced by other
forces,
such as the performance of the funds in which they were
invested.
Defined contribution plans obviously involve risk, and are
designed
to impose that risk on the plan participant.
Loughlin’s comment was not responsive on the issue of the
meaning of “costs,” nor was he ever questioned on this issue.
Even
assuming that account values are a benefit, the “cost” referred
to
in the provision, does not mean that Unisys promised to pay
the
lost value of the frozen Executive Life balances.
The provision “all costs for the benefits covered herein
will
be borne by the Company” is found in the ERISA portion of
the
contract at Article 28, Section 7. The term “costs” in this
sentence does not mean losses sustained in individual
investment
accounts. Were it otherwise, Unisys would be the guarantor for
all
funds in the RIP, including the highly speculative equity
funds.
“Costs” refers to the expenses incurred as a result of
administering the plan under ERISA. Indeed, the term “costs”
is
defined in the Appendix to the RIP Prospectus which
explains:
all costs of administration of the Plan will be paid by
theTrustee from the assets of the Plan, except to the extent
thatthe Company elects to pay all or a part of such costs. As ofthe
date of this Appendix [dated March 9, 1988], the Companyhas elected
to pay internal administrative costs,recordkeeping fees for
monitoring individual accounts, costsof voting solicitation and
furnishing of stockholder
-
-16-
communications and costs of communications, materials andforms.
Expenses related to the operation of the trust, suchas trustee’s
fees, investment management fees, brokerage fees,transfer taxes and
other expenses incidental to the purchaseand sale of trust assets,
or which are incurred subsequent tothe termination of the Plan, are
paid by the Trustee from theassets of the Plan. Except for loan
fees, the company willnot receive any fees or charge, or be
reimbursed for anyexpenses from the Plan.
See Prospectus, Unisys RIP, dated April 1, 1988, at p. I-3.
The RIP Plan Document also defines “costs.” It provides:
All costs of administration of the Plan and expenses relatedto
the operation of the Trust will be paid by the Trustee fromthe
assets of the Trust, except to the extent that the Companyelects to
pay all or a part of such costs and expenses.
See Unisys Retirement Investment Plan, at 110. In sum, the
losses
sustained in the individual accounts, a necessary feature of
defined contribution plans, cannot be equated with the costs
assumed by Unisys in the administration of the RIP.
Based on this Court’s analysis of the Motions by both the
444
Plaintiffs and Defendants, the Court finds that there are no
genuine issue of material fact and Defendants are entitled
to
judgment as a matter of law.
V. LOCAL 445, 450, 470, 165 AND 3 PLAINTIFFS’ CLAIMS
AGAINSTDEFENDANTS
The following three documents signed by bargaining
representatives from Locals 445, 450 and 470 openly
acknowledge
that the RIP was intended to be a “mirror image” of the USP in
all
aspects, with the exception of rate of contribution and
definition
of service:
1) A “Memorandum of Agreement” entered into on
-
-17-
September 12, 1988 between Unisys and Locals 445, 450, and
470
states that the “RIP in all respects [is the] same as Unisys
Savings Plan.” See Memorandum of Agreement of Sept. 12, 1988,
at
3.
2) A document titled “Retirement Investment Plan” which
is dated September 13, 1988, represents a settlement
agreement
between Unisys and the I.U.E. Conference Board in which the
parties
agreed that:
The Retirement Investment Plan shall continue to conform withthe
Unisys Savings Plan in all respects, except for thedefinition of
Service and the rate of contribution on the partof the Company. Any
future changes to the Unisys Savings Plan(exclusive of rate of
contribution on the part of the Employerand the definition of
service), will continue to automaticallyapply to the Retirement
Investment Plan and allinterpretations and administrative practices
which apply tothe Unisys Savings Plan shall apply to the
RetirementInvestment Plan.
See Retirement Investment Plan Document of Sept. 13, 1988, at
1.
3) A “Memorandum of Agreement” entered into on
September 10, 1982, prior to the Sperry-Burroughs merger, signed
by
the I.U.E. Conference Board, acknowledges the creation of
the
Sperry RIP, which was the predecessor to the Unisys RIP, and
that
“any future changes to the Part B of the Sperry Retirement
Program
exclusive of the rate of contribution on the part of the
Company
will automatically apply to the Sperry Retirement Investment
Plan
and all interpretations and administrative practices which apply
to
the Part B of the Sperry Retirement Program shall apply to
the
Retirement Investment Plan.” See Memorandum of Agreement of
Sept.
-
-18-
10, 1982, at 4.
The governing collective bargaining agreement between
Local 450 and Unisys also contains “mirror image” language
similar
to that in the above-listed agreements between the I.U.E.
Conference Board and Unisys:
The Retirement Investment Plan shall continue to conform withthe
Unisys Savings Plan in all respects, except for thedefinition of
Service and the rate of contribution on the partof the Employer.
Any future changes to the Unisys SavingsPlan (exclusive of rate of
contribution on the part of theEmployer and the definition of
service), will continue toautomatically apply to the Retirement
Investment Plan and allinterpretations and administrative practices
which apply tothe Unisys Savings Plan shall apply to the
RetirementInvestment Plan.
See Collective Bargaining Agreement between Local 450 and
Unisys,
dated Sept. 10, 1988-Sept. 6, 1991, at 144.
Local 3's collective bargaining agreement contains clear
“mirror image” language demonstrating that Local 3 and
Unisys
agreed that the RIP was identical to the USP except for the
definition of service and rate of contribution:
The Retirement Investment Plan shall continue to conform withthe
Unisys Savings Plan in all respects, except for thedefinition of
Service and the rate of contribution on the partof the Employer.
Any future changes to the Unisys SavingsPlan (exclusive of rate of
contribution on the part of theEmployer and the definition of
service), will continue toautomatically apply to the Retirement
Investment Plan and allinterpretations and administrative practices
which apply tothe Unisys Savings Plan shall apply to the
RetirementInvestment Plan.
See Collective Bargaining Agreement between Local 3 and
Unisys,
dated Oct. 23, 1988-Oct. 18, 1991, at 59.
Local 165's collective bargaining agreement does not discuss
-
-19-
the RIP. See Collective Bargaining Agreement between Local 165
and
Unisys, 1987-90. A letter of understanding, dated October 3,
1990,
from Unisys to the President of Local 165, and signed by the
President of Local 165, however, indicates that the parties
agreed
to “mirror image” plans:
The RIP provisions are patterned after similar provisions
in‘Part B’ of the salaried employees’ retirement savings plan.It is
the parties intent that the administration and terms andconditions
of RIP will be the same as those applied to thesalaried employees’
retirement savings plan during the term ofthe agreement. In
exchange, IUE Local 165 covenants andagrees that neither they, nor
any employees represented bythem, will in any manner challenge the
administration of RIPthrough any legal or administrative
proceedings or thegrievance and/or arbitration provisions of the
laboragreement, provided such administration is consistent with
theAdministrator’s rules and regulations regarding this policythat
are applicable to all participants. The Company agrees,however,
that it will discuss with the Union, upon the itsrequest, any
questions which may arise regarding the RIP orits administration.
In any event, the decision of RIPadministrators shall be final and
binding upon the Union andall bargaining unit employees with
respect to any provisionsof RIP.
See Letter from M.I. Oglensky to Nicholas Klemenz, President
of
Local 165, dated Oct. 3, 1990, at 1-2.
Summary judgment is appropriate because Locals 445, 450,
470,
3 and 165 fail to come forward with a genuine issue of
material
fact to preclude dismissal of their claim that Unisys
guaranteed
their Executive Life investments. Rather, the agreements and
memoranda of understanding between the Locals and Unisys
clearly
indicate that the Locals agreed that the RIP would take its
administrative cue from the USP, except for the definition
of
service and rate of company contributions. These were the
only
-
-20-
contract terms that were not subject to change without the
Locals’
consent. In the case of Locals 450 and 3, the language that
the
RIP mirrors the USP actually appears in their collective
bargaining
agreements. As for the other Locals, while their contracts
contain
a reference to the RIP, other agreements that they signed
expressly
acknowledge that the RIP and the USP were meant to be
identically
administered plans. It is clear from these documents that
any
changes to the USP automatically applied to the RIP, including
the
administrative decision to freeze Executive Life investments
when
Executive Life was seized in April 1991. The Locals cannot
now
contest that decision, as the language they agreed to,
permits
Unisys to make universal decisions in administering its
retirement
plans.
The Locals next attempt to argue that “past practice”
required
the Company to honor transfer requests after the seizure of
Executive Life, and also that Unisys had a “contractual
obligation”
to give “timely” notice of the August 10, 1990 Executive
Life
resolution. This Court has already decided, and the Third
Circuit
affirmed, any misrepresentation and concealment claims in favor
of
Unisys. See In re Unisys Savings Plan Litig., No. 91-3067, 1997
WL
732473 (E.D. Pa. Nov. 24, 1997), aff’d, 173 F.3d 145 (3d
Cir.
1999), cert. denied, Meinhardt v. Unisys Corp., 528 U.S. 950
(1999). This Court specifically found that union plaintiffs
were
solely negligent in failing to transfer their own investments
as
making investment choices was entirely their responsibility.
See
-
-21-
id. at *28 (Unisys made no “‘material misrepresentations’
about
Executive Life. . . . [P]laintiffs had all the information
they
needed to make informed choices about their investments. . .
.
[and] Unisys had no obligation to disclose to the participants
that
which they already knew.”).
As for the Locals’ past practice argument there was no past
practice of honoring transfer requests amidst a seizure of
investment assets by a state regulatory agency. Furthermore,
past
practice is not applicable when the contract language is clear
and
unambiguous. Aetna Casualty & Surety Co. v. Philadelphia
Reinsurance Corp., No. 94-2683, 1995 WL 217631, at *3 (E.D.
Pa.
Apr. 13, 1995) (“If the face of the contract is plan and
unambiguous, evidence of the parties’ performance is
immaterial.”).
The Court thus grants summary judgment in favor of
Defendants
on the Locals’ claims.
An appropriate Order follows.
-
IN THE UNITED STATES DISTRICT COURTFOR THE EASTERN DISTRICT OF
PENNSYLVANIA
IN RE UNISYS SAVINGS PLAN : LITIGATION :
:THIS DOCUMENT RELATES TO: :No. 91-3772 :HENRY ZYLLA, ET AL., on
behalf : MASTER FILE NO. 91-3067of himself and all others
:similarly situated :
: v. :
:UNISYS CORP., ET AL. :
O R D E R
AND NOW, this 9th day of August, 2001, upon consideration
of Plaintiffs Motion for Partial Summary Judgment and Memorandum
in
Support of the Local 444 Plaintiffs’ Motion for Partial
Summary
Judgment(Docket No. 198), Defendants’ Cross-Motion for
Summary
Judgment and Motion in Opposition to Local 444 Plaintiffs’
Motion
for Partial Summary Judgment (Docket No. 205), Memorandum in
Reply
to Defendant’s Opposition to Local 444 Plaintiffs’ Motion
for
Partial Summary Judgment and in Opposition to Defendant’s
Cross-
Motion for Summary Judgment (Docket No. 207), Defendants’
Reply
Memorandum of Law in Support of Defendants’ Cross-Motion for
Summary Judgment and Motion in Opposition to Local 444
Plaintiffs’
Motion for Partial Summary Judgment (Docket No. 210)
Defendants’
Motion for Summary Judgment Against Local 445, 450, 470, 165 and
3
Plaintiffs (Docket No. 204), Memorandum in Opposition to
Defendants’ Motion for Summary Judgment Against Local 445,
450,
-
-2-
470, 3 and 165 Plaintiffs (Docket No. 208) and Defendants’
Reply
(Docket No. 209), IT IS HEREBY ORDERED that Defendants Motions
are
GRANTED and Plaintiffs Motion is DENIED.
IT IS FURTHER ORDERED that the Clerk of the Court shall
enter
judgment in the above captioned matter in favor of Defendants
and
against Plaintiffs.
BY THE COURT:
___________________________HERBERT J. HUTTON, J.